Stock Market: CNBC Report

Last week I indicated there was a "high" in the making and should start a
consolidation within two days. I was off by a day as It started with the third
day. If you will look at the first trend I have boxed off on the chart, you
will see a vertical move without and significant consolidations or counter
trends. Once that exhaustion was completed (and I forecast the exact day of
the completion on this show - months in advance) the index distributed with
two marginal new highs and reversed trend. Now look at the current trend, it
started under different circumstances but it is the same high momentum movement
that cannot be sustained and is now consolidating. If the index is going up
to the 1250 level (which is my forecast), it will now consolidate this fast
trend for a few weeks before making a final run up. The form of this consolidation,
will allow me to forecast the remainder of the move. But for now I believe
the index is establishing a sideways pattern that will run for a few more weeks.
It should not correct back below 1151 or the uptrend will be in doubt.

Last week we confirmed that the uptrend in crude oil was complete, so we'll
look at the US Dollar as it has finally become new worthy.

LET'S LOOK AT THE US DOLLAR INDEX - MONTHLY CHART

This is a monthly chart of the Dollar Index. You can see it is now testing
the previous lows within this huge bear campaign. The last intermediate trend
up was 76 months or just past 6 years. It took only 39 months (just past 3
years) to get back to where the 76 month move up started. Obviously finding
it easier to go down that up. If this were a struggling move down, there might
be a chance for a low. But this is a capitulation move down or it could also
be defined as a panic move down. The US dollar index has lost 30% of its value
in the past three years and the decline is accelerating.

It would be very unusual to end a fast trend down with a double bottom. Especially
when it is moving down at twice the rate that it was able to move up. Most
fast trends down terminate with a capitulation or panic move down. We'll look
at the daily chart next week and develop a forecast for the future in both
price and time.

ASIA

LET'S LOOK AT THE HANG SENG DAILY CHART

For many months I've been saying this index is going up into the weekend of
the 12th of November for a top. The reason for this forecast was
the vibration through "time" of a 90 day cycle. The May low was 90 days down
from high. The index then went 90 days low to low, which set up the high
probability of going 90 days low to high to complete a 180 day cycle low
to high cycle for top. The pattern on the daily chart since Monday is distributive.
There was a large gap up to set in the high with an exhaustion, followed by
a wide range down. This was followed by two inside days or weak rally days
and followed by other wide range day down. If there is no follow through to
Friday's move down, there may be a chance to avoid a correction, but for now
it looks like the next stop is a test of the October high or back to 13426.

IF this is a full fledged correction, the move will find support at 13115
and depending upon the strength of the move down- maximum downside 12700 to
12850.

LET'S LOOK AT THE ALL ORDINARIES INDEX REPRESENTING THE AUSTRALIAN STOCK INDEX

This is a weekly chart and represents a classic "blowoff trend" or the "exhaustion
phase" of a blowoff trend. This style of trend can be seen in most all markets
at one time or another. This is representing an exhaustion of buyers and when
they have exhausted there will be little underlying support for this advance.
Three months ago I made the forecast the index would exhaust up into last week
for a high. I also said that during that 90 day period the index would not
correct back more than 4 days at anytime during the advance, and that was true.
Is this an important high and reversal? There is no evidence of trending down
only the probability in "time" that I worked out. Yes, I do believe this is
am important top. If I am wrong and this "blowoff trend" is not complete, then
it will add another 100 points before it is over. If I am correct the index
will drop between 330 and 430 points in the next three or four months. Please
understand I am not recommending anyone short a vertical market like this,
I am recommending investors take a very close look at their long positions.
This market is in the process of exhausting this uptrend.

Disclaimer: This message is for educational purposes only and does not constitute
trading advice nor an invitation to buy or sell securities. The views are the
personal views of the author. Before acting on any of the ideas expressed,
the reader should seek professional advice to determine the suitability in
view of his or her personal circumstances.